At the launch of the second survey of SME preparedness for SEPA[i], (Single Euro Payments Area), ISME, the Irish Small and Medium Enterprise Association, called on the Government to intervene in the question of an ‘eight weeks no quibble refund clause’[ii] in the implementation of SEPA. While the Association found that there has been a marked improvement in the readiness for the change among SMEs, the threat of the refund clause is causing businesses to opt out of the direct debit system.

Speaking at the launch, ISME chief executive, Mark Fielding said: “Once more the Irish banks have let us down in refusing to implement a Business to Business (B2B) SEPA system and by doing so, place extra costs on Irish Business. The Government, through the Central Bank, still has time to rectify this bank oversight, by insisting on a change for business banking. It is simply not good enough for the Irish banks to wash their hands of this problem, while SMEs struggle to manage.”

On the positive side, the awareness of SEPA has increased among SMEs, from 27% to 58%, since the previous ISME survey in May of this year, with more businesses discussing the implementation with their bank and software provider. The preparedness can be gauged from the fact that only 30% had actually started to prepare in May; this figure has now risen to 73%, with almost 20% already SEPA compliant.

The survey was carried out in mid-September and received 1356 replies. The survey was sponsored by SAGE Ireland.

69% had received information; up from 36% in May.

58% are aware of the impact of SEPA on their organisations’ processes and systems; up from 27% in May.

Of the 69% who had received information, 57% was from their bank, 23% from a business group, 6% from a Government department and 14% from their software provider. Newspapers and radio accounted for less than 2%.

29% were unaware of the date of compliance of 1st February 2014, an improvement on the 63% in May.

There has been a fourfold increase in the number who had discussed the implementation with their bank, at 36%, while 34% had discussed it with their software provider, up from 7% in May.

On the question of implementation and readiness, 73% had started the process, up from 30% in May.

Twice as many enterprises were in early planning or implementation phase (54%) as was the finding in May.

19% stated that they were now SEPA compliant, a big increase on the 1% in May.

However, only 2% had actually tested their procedures with their bank, mainly due to the fact that some of the banks were late in their own preparations.

Overall, the results of this survey are somewhat encouraging in that business is steadily preparing for the implementation date of 1st February 2014. However, it is disappointing to hear that Irish banks are once more slow to react and allow testing of data.

International statistics clearly demonstrate the need for validation as part of the data conversion process and as a cleansing process for both cross-border and domestic SEPA payments. Without significantly better data quality, error rates will rise and the confidence of consumers will be undermined. In addition, this will mean greater error handling costs for business, further affecting consumer confidence. It is therefore essential that banks and payment service providers deliver good validation tools and test facilities to ensure that payments are successful first time.

ISME is recommending the following;

The immediate introduction of a separate B2B SEPA system.

Irish banks be ordered to speed up their implementation and testing procedures.

An increase in national SEPA awareness advertising and promotion.

All SMEs to review their requirements and demand better service from their banks in the lead up to implementation.

In conclusion Fielding warned of the consequences of the banks’ negligence on the ability of SMEs to transact cross border and local payments post February 2014. “The history of Irish banks in how they deal with customers is appalling, with an attitude of “banks’ profits first; customers later”, in the context of SEPA, they have already let us down. It is now incumbent on the Central Bank to ensure that the banks change their ways and properly assist in the change-over to SEPA, through a separate system and proper testing”.

ENDS

For further information contact

Mark Fielding

Chief Executive

Tel: 01 6622755

Mobile: 087 2519675

[i] SEPA is an initiative of the European Commission as part of the European Union’s Lisbon Agenda to improve the efficiency of payments in Euros both cross-border and domestically. As part of this programme, new schemes for credit transfers and direct debits will replace existing payment schemes and existing payments will migrate to the new schemes.

[ii] The ‘No Quibble’ clause means that a payer of a Direct Debit may cancel it at any time within eight weeks of payment and the bank is obliged to refund the monies, The system was designed mainly for consumers but through the Irish banks’ negligence the system is now intended to work for all transactions, including B2B, making it unworkable for business.

ISME is the only independent voice of Small & Medium business in Ireland, representing in excess of 8,750 members across all sectors. The Association is owned and run by owner managers and is independent of big business, government and unions; the TRUE voice of the Irish SME. www.isme.ie